E-wallets like PayU, Citrus struggle to grow user base and get users to transact more

The RBI gave licence to operate prepaid wallets to around 26 entities and the last two years have seen a flurry of launches.Surabhi Agarwal | ET Bureau | Updated: April 28, 2016, 11:28 IST

After a flurry of activity with almost two dozen companies launching prepaid wallets in the last couple of years, the initial euphoria around wallets may be dying down.

Many players - with the exception of dominant Paytm or Snapdeal-owned Freecharge - concede that the numbers of wallet users is stagnating and companies are struggling to get existing users to transact more using their digital money.

While no one has called it quits so far, even players with significant number of wallets such as PayU Money and Citrus told ET that they are not aggressively pushing their own wallets anymore and are unabashedly aligning with rival wallet firms.

The Indian financial services market is hugely under penetrated and the opportunity is very big. “E-Wallet became the back door entry route for companies into financial services, but they are realising now that not many people are interested in it,” said Gupta.

The RBI gave licence to operate pre-paid wallets to around 26 entities and the last two years have seen a flurry of launches from organisations ranging from Ola to conglomerates such as Spice group to several banking and finance firms.

PayU has almost over 8-million active wallets, but Gupta admits that there is hardly any money in them. The use case of wallets may be limited since most people use credit card, debit card or net banking to fill their wallets to transact at online portals or offline stores which also accept cards.

Vishwas Patel, CEO of CCAvenue said that firms such as Freecharge which have a captive audience in terms of e-commerce buyers or ones that have won a payment bank licence like Paytm may be better positioned to operate in this space.

“Standalone players who offer a mere wallet are really struggling to grow themselves and generate revenues,” said Patel. He added this is the reason why most wallet firms are now expanding into offering credit or wealth management services.

Experts warn of increasing pressure in this space, especially for standalone wallet firms, with the upcoming payment and small banks that could also lead to consolidation in this space.

Amrish Rau, MD, of Citrus Payments Solutions, which also had substantial number of wallets at around 2 million said that prepaid wallets have not succeeded in India. “Wallet was neither a bad idea, nor a good idea, it was just an old idea,” he said, adding that the concept was started by PayPal in 2001 in the US.